Construction of a £15 million “Home of Horseracing” project in Newmarket, England, will help showcase the history of Palace House, the last surviving element of Charles II’s racing palace in the town.

It is hoped the project will transform Newmarket’s town centre. Work began on Monday with a ground-breaking event at Palace Yard.

The project is a major regeneration project to transform the five-acre site, including the Palace House, Palace House Stables and the paddocks to the east of Palace Street into an international attraction.

The National Heritage Centre for Horseracing and Sporting Art, to be created on the site, will see the National Horseracing Museum and British Sporting Art Trust move from their present location next to the Jockey Club on Newmarket’s High Street to the Palace House site.

The five-acre site will include a new state-of-the-art racing museum to communicate the speed, drama and excitement of the sport, while Palace House itself will become a national gallery of British sporting art with paintings from private and public collections, including the Tate.

There will also be the space for the first time to accommodate horses from the Retraining of Racehorses charity on site as an essential part of the visitor experience.

The project is expected to be completed by the end of 2015 with the site being formally opened to the public in early spring 2016.

Home of Horseracing Trust chairman Peter Jensen said a huge amount of work has already taken place to get to this point, following eight years of fundraising

“This is the first part of the story – the actual building work will take a year and then following the installation of specialist exhibitions and displays the museum will be moving over 8,000 objects from its present home to the new site,” Jensen said.

“It is so exciting now to be out of the starting gate.”

Forest Heath District Council Councillor James Waters said the development would make a huge difference to Newmarket’s town centre.

The council rescued Palace House by buying the site in 1992 after establishing that its special architectural and historic interest was being adversely affected during a conversion to housing.

The council invested £3.54 million in buying and restoring the property and went on to use it as a Tourist Information Centre, with rooms for corporate events and weddings.